Biden Administration imposes temporary freeze on regulations

Temporary freeze on regulations

Ronald Klain, Assistant to the President and Chief of Staff, on January 20, 2021, issued a memorandum to heads of executive departments and agencies, on behalf of President Biden, imposing a freeze on new regulations pending review by the new administration.


Subject to exceptions for certain emergencies and “other urgent circumstances relating to health, safety, environmental, financial, or national security matters, or otherwise” (and for regulations subject to statutory or judicial deadlines), the memorandum generally directs that:

  • No regulations or rules are to be proposed or issued “in any manner” (including by sending a rule to the Federal Register) until a department or agency head appointed by President Biden reviews and approves the rule.
  • Concerning regulations or rules that have been sent to the Federal Register but not yet published, these rules are to be immediately withdrawn and reviewed.
  • Concerning regulations or rules that have been published in the Federal Register, or that have been issued in any manner, but have not taken effect, consideration is to be given to postponing the effective date for 60 days (from January 20, 2021). During this 60-day period, consideration is to be given to: (1) opening a 30-day comment period to allow interested parties to provide comments and to consider pending petitions for reconsideration involving the rules; and (2) as appropriate and when necessary to continue to review questions of fact, law and policy, further delaying, or publishing for notice and comment proposed rules further delaying, the subject rules beyond the 60-day period. Following the 60-day delay,
    • For those rules that raise no substantial questions of fact, law, or policy, no further action needs to be taken.
    • For those rules that raise substantial questions of fact, law, or policy, agencies are directed to notify the Office of Management and Budget (OMB) Director and take further appropriate action in consultation with the OMB Director.

KPMG observation

The memorandum includes language indicating that the freeze applies to sub-regulatory guidance of general applicability with future effect, which could include revenue rulings, revenue procedures, notices, or frequently asked questions (FAQs).

Most regulatory guidance under the 2017 tax law (Pub. L. No. 115-97) often referred to as the “Tax Cuts and Jobs Act” was issued and became effective before January 20, 2021, and is outside the executive action.  Nevertheless, the new administration could still review and revisit any prior guidance, subject to applicable limitations in the Administration Procedures Act and Code section 7805.

Separately, President Biden on January 20, 2021, signed an Executive Order that revokes Executive Order 13771 (January 30, 2017).

The 2017 Executive Order, signed by then-President Trump, included requirements that when an executive department or agency publicly proposed a new regulation, it had to identify at least two existing regulations to be repealed.  It also directed the heads of all agencies that the total incremental costs of all new regulations, including repealed regulations, were to be no greater than zero ($0) unless required by law or consistent with guidance from OMB.

Thus, an agency no longer is required to identify at least two existing regulations to be repealed each time it publicly proposes for notice and comment or otherwise promulgates a new regulation.

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